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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Litigation The nature of the operations of the Company's hotels exposes those hotels, the Company and the Operating Partnership to the risk of claims and litigation in the normal course of their business. IHM is currently a defendant in a class action lawsuit pending in the Santa Clara County Superior Court. The class action lawsuit was filed on October 21, 2016 under the title Ruffy, et al, v. Island Hospitality Management, LLC, et al. Case No. 16-CV-301473. The class action relates to hotels operated by IHM in the state of California and owned by affiliates of the Company and the NewINK JV, and/or certain third parties. The complaint alleges various wage and hour law violations based on alleged misclassification of certain hotel managerial staff and violation of certain California statutes regarding incorrect information contained on employee paystubs. The plaintiffs seek injunctive relief, money damages, penalties, and interest. None of the potential classes has been certified and we are defending our case vigorously. As of December 31, 2017, included in accounts payable and expenses is $0.2 million which represents an estimate of the Company’s exposure to the litigation and is also its estimated maximum possible loss that the Company may incur. Hotel Ground Rent The Courtyard Altoona hotel is subject to a ground lease with an expiration date of April 30, 2029 with an extension option by the Company of up to 12 additional terms of five years each. Monthly payments are determined by the quarterly average room occupancy of the hotel. Rent currently is equal to approximately $8,000 per month when monthly occupancy is less than 85% and can increase up to approximately $20,000 per month if occupancy is 100%, with minimum rent increased by two and one-half percent (2.5%) on an annual basis. The Residence Inn San Diego Gaslamp hotel is subject to a ground lease with an expiration of January 31, 2065 with an extension option by the Company of up to three additional terms of ten years each. Monthly payments are currently approximately $40,000 per month and increase 10% every 5 years. The hotel is subject to supplemental rent payments annually calculated as 5% of gross revenues during the applicable lease year, minus 12 times the monthly base rent scheduled for the lease year. At the Residence Inn New Rochelle hotel is subject to an air rights lease and garage lease that each expires on December 1, 2104. The lease agreements with the City of New Rochelle cover the space above the parking garage that is occupied by the hotel as well as 128 parking spaces in a parking garage that is attached to the hotel. The annual base rent for the garage lease is the hotel’s proportionate share of the city’s adopted budget for the operations, management and maintenance of the garage and established reserves to fund the cost of capital repairs. Aggregate rent for 2017 under these leases amounted to approximately $26,000 per quarter. The Hilton Garden Inn Marina del Rey hotel is subject to a ground lease with an expiration of December 31, 2067. Minimum monthly payments are currently approximately $43,000 per month and a percentage rent payment less the minimum rent is due in arrears equal to 5% to 25% of gross income based on the type of income. Office Lease The Company entered into a new corporate office lease in September 2015. The lease is for a term of 11 years and includes a 12-month rent abatement period and certain tenant improvement allowances. The Company has a renewal option of up to 2 successive terms of five years each. The Company shares the space with related parties and is reimbursed for the pro-rata share of rentable space occupied by the related parties. Future minimum rental payments under the terms of all non-cancellable operating ground leases and the office lease under which the Company is the lessee are expensed on a straight-line basis regardless of when payments are due. The following is a schedule of the minimum future payments required under the ground, air rights, garage leases and office lease as of December 31, 2017, for each of the next five calendar years and thereafter (in thousands):
| Other Leases(1) | Office Lease
| Amount
2018 | $ | 1,217 |  | $ | 772 |
2019 | 1,220 |  | 792 |
2020 | 1,267 |  | 812 |
2021 | 1,273 |  | 832 |
2022 | 1,276 |  | 853 |
Thereafter | 68,178 |  | 3,310 |
Total | $ | 74,431 |  | $ | 7,371 |
(1) Other leases included ground, garage and air rights leases at our hotels. Management Agreements The management agreements with Concord had an initial ten-year term that would have expired on February 28, 2017. The management agreements with Concord were terminated as of December 31, 2016. The Company entered into management agreements with IHM for the hotels previously managed by Concord beginning January 1, 2017. The management agreements with IHM have an initial term of five years and automatically renew for two five-year periods unless IHM provides written notice to us no later than 90 days prior to the then current term's expiration date of their intent not to renew. The IHM management agreements provide for early termination at the Company’s option upon sale of any IHM-managed hotel for no termination fee, with six months advance notice. The IHM management agreements may be terminated for cause, including the failure of the managed hotel to meet specified performance levels. Base management fees are calculated as a percentage of the hotel's gross room revenue. If certain financial thresholds are met or exceeded, an incentive management fee is calculated as 10% of the hotel's net operating income less fixed costs, base management fees and a specified return threshold. The incentive management fee is capped at 1% of gross hotel revenues for the applicable calculation. As of December 31, 2017, terms of the Company's management agreements are (dollars are not in thousands):
Property | Management Company | Base Management Fee | Monthly Accounting Fee | Monthly Revenue Management Fee | Incentive Management Fee Cap
Courtyard Altoona | IHM | 3.0 | % | $ | 1,500 |  | $ | 1,000 |  | 1.0 | %
Springhill Suites Washington | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton Boston-Billerica/ Bedford/ Burlington | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton Minneapolis-Mall of America | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton Nashville-Brentwood | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton Dallas-Market Center | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton Hartford-Farmington | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton Orlando-Maitland | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Hampton Inn & Suites Houston-Medical Center | IHM | 3.0 | % | 1,000 |  | — |  | 1.0 | %
Residence Inn Long Island Holtsville | IHM | 3.0 | % | 1,000 |  | — |  | 1.0 | %
Residence Inn White Plains | IHM | 3.0 | % | 1,000 |  | 876 |  | 1.0 | %
Residence Inn New Rochelle | IHM | 3.0 | % | 1,000 |  | 876 |  | 1.0 | %
Residence Inn Garden Grove | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Mission Valley | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Homewood Suites by Hilton San Antonio River Walk | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Washington DC | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Tysons Corner | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Hampton Inn Portland Downtown | IHM | 3.0 | % | 1,000 |  | 550 |  | 1.0 | %
Courtyard Houston | IHM | 3.0 | % | 1,000 |  | 550 |  | 1.0 | %
Hyatt Place Pittsburgh North Shore | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Hampton Inn Exeter | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Hilton Garden Inn Denver Tech | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Residence Inn Bellevue | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Springhill Suites Savannah | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Silicon Valley I | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Silicon Valley II | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn San Mateo | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Mountain View | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Hyatt Place Cherry Creek | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Courtyard Addison | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Courtyard West University Houston | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Residence Inn West University Houston | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Hilton Garden Inn Burlington | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Residence Inn San Diego Gaslamp | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Hilton Garden Inn Marina del Rey | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Residence Inn Dedham | IHM | 3.0 | % | 1,200 |  | 1,000 |  | 1.0 | %
Residence Inn Il Lugano | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Hilton Garden Inn Portsmouth | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Courtyard Summerville | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Embassy Suites Springfield | IHM | 3.0 | % | 1,500 |  | 1,000 |  | 1.0 | %
Management fees totaled approximately $9.9 million, $9.4 million and $8.7 million, respectively, for the years ended December 31, 2017, 2016 and 2015. Incentive management fees paid to IHM for the years ended years ended December 31, 2017, 2016 and 2015 were $0.2 million, $0.3 million and $0.3 million, respectively. There have been no incentive management fees accrued or paid to Concord. Franchise Agreements The Company’s TRS Lessees have entered into hotel franchise agreements with Promus Hotels, Inc., a subsidiary of Hilton, Hampton Inns Franchise, LLC, Marriott International, Inc., Hyatt Hotels, LLC and Hilton Garden Inns Franchise, LLC. Terms of the Company's franchise agreements are as of December 31, 2017:
Property | Franchise/Royalty Fee | Marketing/Program Fee | Expiration
Homewood Suites by Hilton Boston-Billerica/ Bedford/ Burlington | 4.0 | % | 4.0 | % | 2025
Homewood Suites by Hilton Minneapolis-Mall of America | 4.0 | % | 4.0 | % | 2025
Homewood Suites by Hilton Nashville-Brentwood | 4.0 | % | 4.0 | % | 2025
Homewood Suites by Hilton Dallas-Market Center | 4.0 | % | 4.0 | % | 2025
Homewood Suites by Hilton Hartford-Farmington | 4.0 | % | 4.0 | % | 2025
Homewood Suites by Hilton Orlando-Maitland | 4.0 | % | 4.0 | % | 2025
Hampton Inn & Suites Houston-Medical Center | 5.0 | % | 4.0 | % | 2020
Courtyard Altoona | 5.5 | % | 2.0 | % | 2030
Springhill Suites Washington | 5.0 | % | 2.5 | % | 2030
Residence Inn Long Island Holtsville | 5.5 | % | 2.5 | % | 2025
Residence Inn White Plains | 5.5 | % | 2.5 | % | 2030
Residence Inn New Rochelle | 5.5 | % | 2.5 | % | 2030
Residence Inn Garden Grove | 5.0 | % | 2.5 | % | 2031
Residence Inn Mission Valley | 5.0 | % | 2.5 | % | 2031
Homewood Suites by Hilton San Antonio River Walk | 4.0 | % | 4.0 | % | 2026
Residence Inn Washington DC | 5.5 | % | 2.5 | % | 2033
Residence Inn Tysons Corner | 5.0 | % | 2.5 | % | 2031
Hampton Inn Portland Downtown | 6.0 | % | 4.0 | % | 2032
Courtyard Houston | 5.5 | % | 2.0 | % | 2030
Hyatt Place Pittsburgh North Shore | 5.0 | % | 3.5 | % | 2030
Hampton Inn Exeter | 6.0 | % | 4.0 | % | 2031
Hilton Garden Inn Denver Tech | 5.5 | % | 4.3 | % | 2028
Residence Inn Bellevue | 5.5 | % | 2.5 | % | 2033
Springhill Suites Savannah | 5.0 | % | 2.5 | % | 2033
Residence Inn Silicon Valley I | 5.5 | % | 2.5 | % | 2029
Residence Inn Silicon Valley II | 5.5 | % | 2.5 | % | 2029
Residence Inn San Mateo | 5.5 | % | 2.5 | % | 2029
Residence Inn Mountain View | 5.5 | % | 2.5 | % | 2029
Hyatt Place Cherry Creek | 3% to 5.0% |  | 3.5 | % | 2034
Courtyard Addison | 5.5 | % | 2.0 | % | 2029
Courtyard West University Houston | 5.5 | % | 2.0 | % | 2029
Residence Inn West University Houston | 6.0 | % | 2.5 | % | 2024
Hilton Garden Inn Burlington | 5.5 | % | 4.3 | % | 2029
Residence Inn San Diego Gaslamp | 6.0 | % | 2.5 | % | 2035
Hilton Garden Inn Marina del Rey | 3% to 5.5% |  | 4.3 | % | 2030
Residence Inn Dedham | 6.0 | % | 2.5 | % | 2030
Residence Inn Il Lugano | 3% to 6.0% |  | 2.5 | % | 2045
Hilton Garden Inn Portsmouth | 5.5 | % | 4.0 | % | 2037
Courtyard Summerville | 6.0 | % | 2.5 | % | 2037
Embassy Suites Springfield | 5.5 | % | 4.0 | % | 2037
Franchise and marketing/program fees totaled approximately $23.2 million, $22.4 million and $21.2 million, respectively, for the years ended December 31, 2017, 2016 and 2015.

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